Murray considers options for troubled fiber-optic network

UTOPIA • One plan calls for ending network; another would put in another $24 million.

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Murray • Residents packed City Council chambers Tuesday to hear various alternatives for the future of the high-speed, fiber-optic network that shackles 11 Utah cities with significant debt.

Todd Marriott, executive director of the Utah Telecommunications Open Infrastructure Agency (UTOPIA), laid out those options, which ranged from pulling the plug entirely and allowing the decade-old project to "go dark" to pledging an additional $24 million that he said would enable the network to break even in three years.

"Over the past six to seven months we have vigorously debated and looked at the best way to go forward," Marriott said.

The most extreme option would be to "cut our losses, chop off the lines, go home and not put another dime into the thing," Marriott said.

The incomplete underground network could also be sold for cents on the dollar, Marriott said, and some have suggested switching to wireless as a means to offset the costs of installing the remaining fiber optic lines in the ground.

However, some stakeholders support finishing the network as planned. All options have been on the table, Marriott said, as the company reeled in the wake of last year's Legislative audit that blasted UTOPIA for using bond debt to cover operations in addition to infrastructure.

Murray is one of 11 member cities that joined UTOPIA a decade ago; the group committed to $185 million in bond debt that stretches through 2040.

The economic downturn, coupled with missteps and mishaps, led Murray and seven other member cities to form the Utah Infrastructure Agency (UIA) in 2010 to approve an additional $60 million in bonds to rescue the floundering project.

About 18 months ago, UIA launched a five-year plan to make the network viable and tapped $29.5 million of that $60 million, part of which was used to match federal stimulus dollars to expand the network.

By mid-2012, Murray had already paid out $3.6 million and remains on the hook for $58.6 million through 2040. The city's fiber-optic lines are 64 percent built out, and about 22 percent of residents and 10 percent of businesses who could attach to the lines have done so.

Among all member cities, only about 10,000 subscribers have connected to the network.

"Right now, we're in deficit to cover operations this month by about $225,000," Marriott said.

By tapping an additional $24 million over the next two years and targeting areas where UTOPIA could get the best rate of return, Marriott believes that within three years UTOPIA could achieve the coveted break-even status where revenues cover expenses.

The go-dark option would attract multiple lawsuits, Marriott said, and combined with other factors would make it very costly. And he projected that selling the network would simply speed up the go-dark process due to certain financing requirements. Augmenting the network with wireless service would require significant investment as well, he added, and would not provide any cost savings.

Councilman Jim Brass worries about other demands on the city's budget, including insurance requirements that kick in under the Affordable Care Act.

"My concern is, I don't have a problem with raising property taxes if we have to provide services to our citizens, but to raise taxes for something that only benefits 16 percent of the entire city population disturbs me," Brass said to loud applause.

Further deliberations about the UTOPIA conundrum are expected to unfold in coming months as budget decisions are made. No decisions were made Tuesday night.

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